Attorneys practicing in and around the Chicagoland area. Experienced in the practice areas of Real Estate Law, Mortgage Foreclosure Defense Litigation, Social Security Disability, Business Law, & Estate Law.

 - Attorneys practicing in and around the Chicagoland area. Experienced in the practice areas of Real Estate Law, Mortgage Foreclosure Defense Litigation, Social Security Disability, Business Law, & Estate Law.

Lawyers Who Took on Big Tobacco Are Aiming at Realtors and Their 6% Fee

Illinois home with tax lien

A new class-action lawsuit takes aim at real estate agents and the tools they use to do business, and housing industry watchers say it could revolutionize the way Americans buy and sell the biggest asset they’ll ever own.

The suit was filed in Chicago on behalf of anyone who sold a home through one of 20 of the largest listing services in the country over the past five years.

It charges that the mighty Washington-based lobby National Association of Realtors, as well as the four largest national real estate brokerages, and the Multiple Listing Services they use, have conspired to require anyone selling a home to pay the commission of the broker representing their buyer “at an inflated amount,” in violation of federal antitrust law.

Homeowners who are ready to sell their properties usually hire a real-estate agent to represent them by staging the home, photographing it, adding it to the MLS, marketing it, and showing it to prospective buyers.

Sellers agree to pay that person a commission on the selling price of the home. That commission has traditionally been known as the “6%,” but it’s a little more complicated than that.

Home for saleSellers can really only negotiate with the agent they’ve hired, while agents representing buyers are generally assured of a standard 3% commission. That means that a seller’s agent who’s willing to negotiate, or one that works for a discount brokerage like Redfin RDFN, +0.71% , will be paid less than a buyer’s agent.

Buyers can choose to be represented by an agent, or to go without one – but in any case, all commission money for both sides of the deal is always paid by the seller, thanks to a 1996 NAR rule known as the “Buyer Broker Commission Rule.”

In order to list a property on one of the many regional databases known as Multiple Listing Services, agents must abide by the Buyer Broker Rule.

Listing on the MLS is essential for making a sale, and most MLSs are controlled by local NAR associations.

“The conspiracy has saddled home sellers with a cost that would be borne by the buyer in a competitive market,” the lawsuit says. “Moreover, because most buyer brokers will not show homes to their clients where the seller is offering a lower buyer broker commission, or will show homes with higher commission offers first, sellers are incentivized when making the required blanket, non-negotiable offer to procure the buyer brokers’ cooperation by offering a high commission.”

As MarketWatch has previously reported, many housing observers call Realtors a “cartel” for the way they purposely steer clients to transactions in which traditional ways of doing business are observed.

Rob Hahn is the founder and managing partner of 7DS Associates, a real estate consultancy. In a blog posted shortly after the lawsuit was filed, Hahn called it a potential “nuclear bomb on the industry.” And in an interview with MarketWatch, he said that he’s taking it “very seriously.”

Property Tax Assessment - CalculatorIn large part, that’s because of the heft of the law firms behind the suit. Both Cohen Milstein Sellers & Toll, and Hagens Berman Sobol Shapiro have a long history of prevailing over weighty entities like Volkswagen, for its emissions scandal, Apple, for its e-book collusion, and Exxon , after the Valdez spill.

In response to a request for comment, NAR said, “The complaint is baseless and contains an abundance of false claims. The U.S. Courts have routinely found that Multiple Listing Services are pro-competitive and benefit consumers by creating great efficiencies in the home-buying and selling process. NAR looks forward to obtaining a similar precedent regarding this filing.”

Still, as Hahn put it, past lawsuits have mostly been filed by what he calls “ambulance-chasers,” not the firms behind some of the biggest civil settlements in American history.

That view is shared by Cohen Milstein partner Daniel Small, who called the way Realtors do business “a longstanding problem.” What’s different now, Small told MarketWatch, is that deep-pocketed law firms had done a “substantial investigation” that convinced them that there was merit to the case.

Small declined to elaborate on what had prompted the investigation in the first place.

Photo by Max Pixel

It’s worth noting, however, that the suit was filed roughly four months after the expiration of a Department of Justice consent decree against the National Association of Realtors. That settlement was struck in 2008 after the federal government spent several years unsuccessfully trying to rein in what it called anti-competitive behavior from NAR, which felt under attack from internet upstarts.

Hahn thinks it’s ironic that an innovation that tried to protect buyers, by providing them with representation in a complex and deeply emotional transaction, has soured the market so badly.

Many housing watchers have long argued that real estate services should be paid for a la carte, or in a sliding-scale fee structure, rather than a flat commission, whether that’s 6% or 1%. But, Hahn said, “there’s no chance whatsoever that the industry goes that way voluntarily.”

What’s more likely, he thinks, is that the American system will come to resemble real estate markets in Australia or England, where sellers and buyers each pay their own broker – or don’t. After all, buyers are usually “cash-strapped,” Hahn noted: saving every nickel for a down payment, closing costs and moving expenses. While the entrenched interests in the American real estate industry will argue that’s not consumer-friendly, Hahn says he’s “never seen a study that says buyers get screwed” without representation.

A former lawyer himself, Hahn isn’t sure how to handicap this case. But if it prevails, he thinks enormous changes are in store for the industry. The ranks of buyers’ brokers will likely be decimated, and the infrastructure behind the MLSs and the local associations will wither away too.

A spokesperson for Realogy RLGY, +1.10% said, “We believe this case has no merit and will not be commenting further.”

A spokesperson for Keller Williams said, “It’s not our policy to comment on pending litigation.” A spokesperson for RE/MAX Holdings RMAX, +1.32% declined to comment, and a request for comment by Berkshire Hathaway-held BRK.B, +0.21% HomeServices of America, Inc. was not returned.

“This is an important case for many reasons,” Daniel Small said. “Among them is that this is the biggest transactions of most peoples’ lives. There is a lot at stake.”

This story originally appeared in MarketWatch and was written by Andrea Riquier.


 

Law Offices of Lora Matthews Fausett, P.C.

If you require a real estate attorney in DuPage, Kane, Will, Kendall, or Cook County to represent you with any issues related to real estate, the Law Offices of Lora Matthews Fausett, P.C. are well trained to handle matters relating to buying and selling, short salescommercial leases, as well as foreclosure defense and many others.

 

For Information Call 630-858-0090


* Advertising Material: To the extent that the information in this post is interpreted as attorney advertising in accordance with the Illinois Rules of Professional Conduct or within the meaning of state bar rules from all other localities, this statement is made pursuant to those rules.

Specialties: Specialization claims are prohibited by Illinois Supreme Court Rules and we do not claim to be specialists. The content of this e-mail is organized and presented for the sole purpose of general information. None of the included content should be construed as legal advice. Viewing this e-mail or e-mailing the account holder does not create an attorney-client relationship. NOTICE: This page may be considered advertising material.


MLS Lawsuit Could Change the Real Estate Industry

MLS Lawsuit - Class Action Suit

In this post, we discuss a potentially “game-changing” lawsuit that could change the entire real estate market.

The real estate market could be facing big changes depending on the outcome of a class action lawsuit against the National Association of Realtors and the four biggest nationwide realtors.

 

About the Lawsuit

The defendants are being accused of violating federal antitrust law in a conspiracy to overcharge home sellers by requiring them to pay broker’s commissions to the agents who represent the buyers of their home.

The class action lawsuit is against RE/MAX, Keller Williams, Realogy, HomeServices of America, and the National Association of Realtors.

The suit has been filed in federal district court in Chicago and focuses on a rule it says has been imposed by the National Association of Realtors.

The rule requires brokers who list sellers’ properties on local MLS to include a “non-negotiable offer” of compensation to the buyer agents. That is, once a home seller agrees in a listing to a specific split of the commission, the buyers cannot later negotiate their agents’ split to a lower rate.

Home For SaleThe suit alleges that this requirement “saddle(s) home sellers with a cost that would be borne by the buyer in a competitive market,” where buyers pay directly for the services rendered by their agents.

In overseas markets where there is not a mandatory compensation rule for buyer agents, total commission costs tend to be lower.

On average, commission costs average 1%-3% percent lower in the United Kingdom, as opposed to the 5-6% that is commonplace in the United States.

 

The Allegation

The class action suit alleges that if home buyers in the United States could negotiate fees directly with the agents they choose to represent them, that fees would be more competitive and the costs lower.

Many U.S. home buyers are unaware of their agent’s commission split. The sellers will typically know what the percentage is because they agreed to it in their listing contract.

Real Estate red tape

Photo by Max Pixel

However, they may wonder: Why am I required to pay the fee of the buyer’s agent, who may be negotiating against my interests in the transaction?

Also, at a time when buyers often search for and find the house they want to buy online, shouldn’t compensation for a buyer’s agents be decreasing, rather than remain at the 2.5%-3% percent range?

The lawsuit states “Because most buyer brokers will not show homes to their clients where the seller is offering a lower buyer broker commission, or will show homes with higher commission offers first, sellers are incentivized when making the required blanket, non-negotiable offer to procure the buyer brokers’ cooperation by offering a high commission. Absent this rule, buyer brokers would be paid by their clients and would compete to be retained by offering a lower commission.”

 

About the Defendants

The National Association of Realtors is the largest trade group in real estate with 1.3 million members.

The four realty companies named as defendants are RE/MAX Holdings Inc., Keller Williams Realty Inc., HomeServices of America Inc. and Realogy Holdings Corp.

Model Home TaxKeller Williams has approximately 180,000 agents in the U.S. and Canada. RE/MAX has 120,000 agents. Realogy includes among its brands Better Homes and Gardens, Century 21, Coldwell Banker Real Estate and ERA; HomeServices of America is a Berkshire Hathaway affiliate and includes Long and Foster Real Estate and Edina Realty.

NAR Vice President Mantill Williams called the suit “baseless” and said it “contains an abundance of false claims.”

“The U.S. Courts have routinely found that Multiple Listing Services are pro-competitive and benefit consumers by creating great efficiencies in the home buying and selling process,” said Williams. “NAR looks forward to obtaining a similar precedent regarding this filing.”

Representatives of the four realty companies declined to comment.

Many Realtors say the suit could dismantle the compensation system as it now exists.

Anthony Lamacchia, broker-owner of Lamacchia Realty in Waltham, Massachusetts, says if the suit is successful “it would basically destroy buyer agency, which would not be in the best interests of buyers or sellers.”

He argues that even in an era where buyers find their homes online, the buyer agent still has important duties in handling contract negotiations, providing strategic advice and guiding clients through the process of closing.

Other brokers challenged allegations in the suit. Alexis Eldorrado, the managing broker of Eldorrado Chicago Real Estate, responded in regards to buyer agents refusing to show homes with low commission splits.

“In reality, if the buyers have found the place they want and are interested in seeing it, NAR’s code of ethics requires the agent to show it,” said Eldorrado.

 

About the Plaintiff

GavelThe plaintiff in the case is Christopher Moehrl.

He sold a home in 2017 using a RE/MAX broker to list the property while the buyer was represented by Keller Williams.

Moehrl paid a total commission of 6 percent. Almost half of that, 2.7 percent, went to the buyer’s agent.

If the case is certified as a class action, the potential number of sellers affected would be massive.

It would include sellers who have paid a broker commission during the past four years in connection with a home listed by an MLS in these metropolitan areas: Washington D.C.; Baltimore; Cleveland; Dallas; Denver; Detroit; Houston; Las Vegas; Miami; Philadelphia; Phoenix; Salt Lake City; Richmond, Virginia; Tampa, Orlando, Sarasota and Ft. Myers, Florida; Charlotte and Raleigh, North Carolina; Austin and San Antonio, Texas; Columbus, Ohio; and Colorado Springs, Colorado.

 

The entire real estate industry will have an interest in the outcome of this case.

 

Sources:

Class action suit could change real-estate commissions – Chicago Tribune

A new class action lawsuit could upend the real estate business as we know it – The Real Deal

What the bombshell buyer-side lawsuit means for Realtors – Inman

 

Law Offices of Lora Matthews Fausett, P.C.

If you require a real estate attorney in Naperville to represent you with any issues related to buying a home or property there, the Law Offices of Lora Matthews Fausett, P.C. are well trained to handle matters relating to buying and selling, short salescommercial leases, as well as foreclosure defense and many others.

 

For Information Call 630-858-0090


* Advertising Material: To the extent that the information in this post is interpreted as attorney advertising in accordance with the Illinois Rules of Professional Conduct or within the meaning of state bar rules from all other localities, this statement is made pursuant to those rules.

Specialties: Specialization claims are prohibited by Illinois Supreme Court Rules and we do not claim to be specialists. The content of this e-mail is organized and presented for the sole purpose of general information. None of the included content should be construed as legal advice. Viewing this e-mail or e-mailing the account holder does not create an attorney-client relationship. NOTICE: This page may be considered advertising material.


Lawsuit Filed in Federal Court Challenging Cook County Property Tax Assessments

Cook County SealA rare lawsuit by a group of seven Cook County taxpayers has been filed in Federal Court challenging their property tax assessments by the Cook County Assessors Office.

 

Here is the story below that was originally published by jdsupra.com:

Rare Lawsuit filed in Federal Court Challenging Property Tax Assessments

Last week a lawsuit was filed in the U.S. District Court for the Northern District of Illinois by a group of seven Cook County taxpayers challenging the time it has taken to adjudicate their claims in the Cook County Circuit Court.

The lawsuit is brought, in part, under the Tax Injunction Act, a federal statute allowing a taxpayer to challenge a state or local tax in federal court when the remedy in state court does not provide for a ‘plain, speedy and efficient remedy.

The taxpayers have been contesting their real estate assessments in the Cook County Circuit Court for more than ten years.

For over a decade, they have been arguing in state court that their constitutional rights have been violated by an assessment process that departs from the requirements of the Cook County Classification Ordinance and the Illinois Constitution.

Now, they are alleging in federal court that the Cook County Court has bogged down due in part to the County’s destruction of records and that only the federal courts can provide them with an appropriate remedy.

You can review the complaint by clicking here.

It is highly unusual for a state court property tax dispute to migrate to federal court.

Overwhelmingly the federal courts have declined jurisdiction of state and local tax matters. Only when the state court remedy denies the plaintiff a plain, speedy and efficient remedy will the federal courts consider a case.

We expect that the County defendants will move to dismiss this lawsuit, and if they are successful, the case will continue in the Circuit Court.

The named defendants in this suit are Cook County Treasurer Maria Pappas and outgoing Cook County Assessor Joe Berrios.

The taxpayers are claiming total damages of more than $27.0 million.

The properties involved are in Bridgeview, Calumet City, Niles, Northbrook, Rolling Meadows, and Rosemont.

Original story via jdsupra.com

 


The Law Offices of Lora Fausett P.C. provides real estate law services including loan modificationsbuying and selling legal assistanceshort sales and deeds in lieumortgage foreclosure defense, and more.

Located in Glen Ellyn, Illinois and serving clients in DuPageCookKane, Will, and Kendall Counties.

For Information Call 630-858-0090

 


Cook County Property Taxes Due August 1, 2018

Cook County Seal

The due date for the Tax Year 2017 Second Installment is Wednesday, August 1, 2018.

The easiest and fastest way to pay your Cook County Property Tax Bill is online.

>> PAY ONLINE

You can also pay property taxes at participating community banks.

 

Pay at Chase Bank locations

You can pay your Cook County property taxes at any Chase Bank location in Illinois, including ones outside Cook County.

If you are unable to pay online, you may present payment with a tax bill payment coupon for the current Tax Year 2017 Second Installment (payable in 2018) and prior Tax Year 2016 (payable in 2017) taxes at any of the nearly 400 Chase Bank locations in Illinois.

Chase Bank logoYour check MUST include:

  • Property Index Number (PIN)
  • Taxpayer Name
  • Property Location, including Unit Number
  • Mailing Address
  • Telephone Number
  • Email Address
  • Tax Year/Installment

Including this information on your check helps us to reach you if there are any questions regarding your payment.

 

Please also note the following about paying current taxes at Chase Bank:

  • You must present a tax bill payment coupon, such as the one you received in the mail with your tax bill. You may print a duplicate coupon on our website. Printouts from our website of other payment information will not be accepted.
  • Through the dates listed on the bill, you may submit payment using cash, standard checks, money orders, cashier’s checks or certified checks drawn on any bank.
  • Partial payments are accepted at Chase Bank.
  • You must submit one original payment coupon and check per PIN.
  • You will receive a dated receipt.

 


More information available at the Cook County Treasurer website.

 


The Law Offices of Lora Fausett P.C. provides real estate law services including loan modificationsbuying and selling legal assistanceshort sales and deeds in lieumortgage foreclosure defense, and more.

Located in Glen Ellyn, Illinois and serving clients in DuPageCookKane, Will, and Kendall Counties.

For Information Call 630-858-0090

 


How Much Will I Get From Social Security if I Make $100,000?

Social Security Retirement Couple

The Social Security program is the biggest provider of retirement payments in the United States.

Unfortunately, many people heading towards retirement have little understanding of how Social Security works or how much they will receive in benefits.

In this post, we offer you a rundown of how much a six-figure earner can expect from Social Security, and also an explanation of how the benefit-calculation process works so you can apply it to your situation.

 

About Social Security Benefits

How is Social Security calculated?

Social Security AdministrationThe Social Security Administration (SSA) keeps a record of your earnings from every year of your working lifetime, up to the annual taxable earnings cap.

When calculating your social security benefits, these annual earnings figures are all indexed for inflation, and the 35 highest years are averaged together.

This average is divided by 12 to determine your average indexed monthly earnings or AIME. If you don’t have 35 years of Social Security-covered earnings, zeros will be used in determining the average for the missing years.

Once your AIME has been calculated, it’s applied to a formula to determine your primary insurance amount (PIA), or your Social Security benefit if you claim at your full retirement age. For 2018, the formula is:

  • 90% of the first $895 in AIME
  • 32% of the amount greater than $895, but less than $5,397
  • 15% of the amount above $5,397
  • It’s important to note that the formula in effect in the year you become eligible (age 62) will be used, regardless of when you actually claim your benefits.

Finally, your benefit will be permanently adjusted if you claim benefits before or after your full retirement age.

Depending on your full retirement age, your benefit can be permanently reduced by as much as 30% if you claim as early as possible, or it can be permanently increased by as much as 32% for waiting until age 70, the latest claiming age.

 

Social Security with a $100,000 average income

Because Social Security benefits are based on 35 years of your earnings, there is no way of knowing what your benefits will eventually be because you’re earning $100,000 right now.

Having said that, let’s calculate a Social Security benefit for someone who averages $100,000 in inflation-adjusted earnings throughout their entire career. We’ll assume this person turns 62 in 2018 so that we can use this year’s benefit formula.

An annual income of $100,000 for your entire career translates to AIME of about $8,333 per month. According to the Social Security formula for 2018, this worker’s primary insurance amount, or PIA, will be $2,686.54.

Workers turning 62 in 2018 have a full retirement age of 66 years and four months, so our hypothetical $100,000 earner would need to wait until this age to receive this entire benefit amount. If they decide to claim right away at age 62, their benefit will be reduced to about $1,970 per month.

Here’s a chart of how much a career $100,000 earner would be entitled to if they claimed Social Security at various ages:

As you can see, the age at which a $100,000 earner decides to start collecting Social Security makes a big difference.

It’s important to point out that these benefits would all be increased by any cost-of-living adjustments, or COLA, that occur between now and when benefits are initially claimed.

For example, if this person claims their retirement benefit next year at age 63 and there’s a 2% COLA given in 2019, the benefit in the chart would be increased by that percentage.

 

How could this change by the time you retire?

Loan Modifications and WorkoutsIf you’re still many years away from retirement, then it is important for you to take this information with a big grain of salt.

Social Security may be in a solid financial situation currently, but it could deteriorate rapidly over the next 15 years or so. Some sort of reforms will be required to fix the program for the long term.

Now, there’s no telling what form the eventual fix will take. It could end up being a simple tax increase, which could keep the Social Security benefit structure exactly how it’s discussed here. On the other hand, some form of benefit cut, such as an increase in the full retirement age, is also a possibility.

The bottom line is that if you’ll be reaching Social Security age in the near future, this discussion should be pretty accurate when it comes to your situation. Beyond that, however, there likely will be some changes.

Original Source: The Motley Fool

 


The Law Offices of Lora Fausett P.C. provides legal services including social security disability, estate planningmortgage foreclosure defense, and more.

Located in Glen Ellyn, Illinois and serving clients in DuPageCookKane, Will, and Kendall Counties.

For Information Call 630-858-0090